Weak economy blamed for surge in welfare cases

Laura LippmanTHE BALTIMORE EVENING SUN

After a year and the use of University of Baltimore's expertise, the Department of Human Resources has identified the reason welfare cases began increasing while the Maryland economy still was healthy.

A thick report of research and graphs released today basically reaches one simple conclusion: The Maryland economy wasn't as healthy as statistics suggested it was.

The increase in the welfare caseload, once thought to be a final indicator of hard times, proved to be the first symptom of the state's economic downturn, the report says. "The study . . . demonstrates that the primary, and virtually the only, cause of the recent increase in the AFDC caseload was the weakening in the economy," concludes the report from the University of Baltimore Center for Business and Economic Studies.

"The caseload is a mirror image of leading indicators [of a recession]," said Michael Conte, director of the center. "It is a leading indicator."

But the fact that the caseload continues to increase reveals little about the future of Maryland's economy, Conte said. When it comes to predicting recovery, the caseload is a lagging indicator.

Asked why the unemployment rate continued to fall while welfare caseloads were rising in 1989 and early 1990, Conte said it was because two-thirds of those on the rolls were known as "discouraged workers" -- people who had given up on finding employment, whose ranks are not reflected in unemployment statistics. The other third was masked by a growth in new employment.

Meanwhile, the study virtually debunks other previously floated theories about the increase -- increases in single-parent families, the migration of welfare families to the state, the teen-age birth rate.

The caseload started up in August 1989. By December 1990, households receiving Aid to Families with Dependent Children had risen from 63,026 to 71,772 -- an unbudgeted expense costing the state almost $40 million.

The UB study found some correlation between the divorce rate and the caseload but no other factor was deemed as significant.

However, the report shied away from making a firm statement on the relationship between the increase and Project Independence, a mandated job-training program implemented statewide about six months before the increase started.

Several legislators have questioned DHR staff about such a relationship. Their theory seemed to be that the training program was so enticing it would lure people into welfare.

"PI was probably not a major cause of the caseload increase," the report says. No client said she quit a job to join Project Independence, and 53 percent of recently employed clients said they had never heard of it.

The report says it doubts clients would admit to quitting jobs to get welfare, so statistics fail to "put the argument to rest."